Baillie Gifford’s Scottish Mortgage chair to step down as board reshuffles

Baillie Gifford's Scottish Mortgage chair to step down as board reshuffles

Fiona McBain

The Scottish Mortgage Investment Trust (SMT) has announced that its chair, Fiona McBain, along with non-executive director Paola Subacchi, will depart after its June AGM.

Subject to shareholder voting at the AGM, Justin Dowley, the company’s current senior independent director, will succeed Ms McBain as chair, and Professor Patrick Maxwell will takeover Mr Dowley’s current role.

Yesterday’s announcement of the reshuffle came after a corporate governance row, in which now former board member Professor Amar Bhidé voiced concerns over the management of the trust and tenure of board members.

However, the board said it had been conducting a recruitment process “over the last few months”, and that the “process is now well advanced”, suggesting that the reshuffle was not prompted by the clash with Mr Bhidé.

Speaking to the Financial Times, Mr Bhidé said: “I’ve been very concerned about the share price performance and the discount, and trying to get people to understand that there is a structural reason for this.”

He also expressed concern that “no one on the board has any professional investment experience”, and pointed out that “the chair of the board is long past the nine-year date at which you are supposed to retire”.

Ms McBain joined the board of Scottish Mortgage in 2009, which would put her tenure at five years past the nine-year recommendation by the UK Corporate Governance code.

However, governance in the case of investment trusts falls under the Association of Investment Companies (AIC) Code of Corporate Governance in which “a more flexible approach to chair tenure” is allowed to “help companies manage succession planning in the context of the sector’s different circumstances”.

The AIC code asks for “a clear rationale for the expected tenure”, and says “the policy should explain how this is consistent with the need for regular refreshment and diversity”.

SMT’s policy states it determines the tenure of the chair “principally by how the board’s purpose in providing strategic leadership, governance and bringing challenge and support to the managers can best be maintained”. It goes on to say “it does not believe the imposition of hard time limits to be helpful in respect of this role, any more than for the tenure of directors overall”.

On the departure of Ms McBain and Ms Subacchi, Mr Dowley commented: “On behalf of the board, I would like to thank Paola for her substantial contributions during her nine years as a non-executive director.

“I would also like to thank Fiona for her 14 years of loyal and exceptional service to the company, in particular over the last few years (and at the request of her fellow directors) providing essential continuity, reassurance and leadership during the extraordinary circumstances of Covid-19 and through a period of transition on the board and with the managers.”

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